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No easy path for local small business owners wanting to retire

Richard and his daughter, Chantelle Pierson. Richard is one of many baby boomer business owners looking towards retirement.
March 01, 2019 - 6:30 PM

VERNON - Richard Pierson is very happy his daughter will take over the business he founded 33 years ago. At age 60, Richard is looking to transition into retirement and his daughter Chantelle Pierson is ready and willing to buy the family business, Vernon's JC Bradley Jewellers.

Richard knows he's one of the lucky ones. The financial plan worked out between he and Chantelle will allow the family business to continue, while also keeping long term staff employed and loyal customers happy.

But without a family member to take over, Richard says he'd be liquidating his business and closing up for good.

"It's next to impossible to get financing for a jewellery store," he said. "Between online shopping and brick and mortars closing, it's the perfect timing for my daughter to come in."

Richard is one of many from the baby boomer generation of business owners looking to sell up and retire. A recent study by the City of Vernon found almost 35 per cent of downtown Vernon business owners plan to sell or retire in the next five years. The online survey was sent to roughly 200 businesses in the downtown core and received 49 responses. Although just a small sample, the statistic is in line with other studies as a population heavy with baby boomers looks towards retirement.

We've long known that retiring baby boomers would have a huge impact on health care, education and other services but clearly it's a concern among business owners as well. 

According to Statistics Canada figures from 2014, almost 50 per cent of small businesses owners were between 50 and 64 years old. A study from the Canadian Federation of Independent Business in 2018 found that nearly 75 per cent of business owners planned to exit their business within the next 10 years.

Vernon Mayor Victor Cumming said the survey confirms what he sees first-hand.

"A lot of people my age who have been running small businesses all their lives who are now looking to quit," Cumming said. "People I know, I'm watching them struggling with it."

Baby boomers trying to sell their businesses is something Vernon commercial realtor Ken McCluskey regularly deals with.

McCluskey said if business owners don't have kids that are interested in taking over, the realities of selling small firms often comes as a shock.

"If it's a mom and pop business, it's very hard to sell," he said. Even successful small business often have books that don't show a profit, which means banks are reluctant to lend to prospective buyers. McCluskey said sellers often have unrealistic expectations about how much their businesses are worth.

"Everybody's little business is their castle, they think they've developed a huge monopoly on the market," he said. The reality is quite different.

McCluskey said it's much easier to sell an established small business if it employs 20 to 30 people, but the smaller players are far more difficult to shift.

"People gravitate to new businesses and usually those are national tenants," he said. "That's started to eat the smaller businesses."

As small businesses are replaced by national chains and baby boomers owners look to retirement, Chantelle says she knows she is in a lucky position. Without her father's succession plan to sell her the business over time, she said there was no way she could do it.

The City's study showed only 41 per cent of business owners had a succession plan and figures from the CFIB show while over 80 per cent of businesses planned to sell to retire, only eight per cent had a formal written plan.

The mayor said succession planning is critical and the City can play a role by pulling together the various agencies who play a part and being a focal point.

"We've got to get creative with this," he added.

Chantelle and Richard Pierson at their downtown Vernon store.
Chantelle and Richard Pierson at their downtown Vernon store.

To contact a reporter for this story, email Ben Bulmer or call (250) 309-5230 or email the editor. You can also submit photos, videos or news tips to the newsroom and be entered to win a monthly prize draw.

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